Performance appraisal

Fundamentals of Human Resource Management 8e, DeCenzo and Robbins

PERFORMANCE APPRAISAL Chapter 8

Human Resource Management

The process by which organizations evaluate individual job performance

Process of defining “expectations” for employee's performance”, measuring,

evaluating against these “expectations” and providing “feedback”.

Uses of Performance Appraisal

Performance improvement- Performance feedback allows the employee, the manager & the HR personnel to intervene with appropriate actions to improve performanceCompensation adjustments – PA helps decision makers determine who should receive pay raisesPlacement decisions – Promotions, transfers, and demotions are based on PATraining & development needs – Poor performance may indicate a need for retraining. Likewise, good performance may indicate untapped potential that should be developed

Uses of Performance Appraisal continue

Career Planning & Development- Performance feedback guides career decisions about specific career paths one should investigateStaffing Process Deficiencies – Good or bad performance implies strength or weaknesses in the personnel dept staffing proceduresJob Design Errors- Poor performance may be a symptom of improper job design. PA helps diagnose’ these errors.External Factors- Sometimes performance may be affected by external factor such as family, financial, health etc. If these factors are uncovered the HR dept may be able to provide assistanceFeedback To HR- Good or bad performance shows the overall function of HR department

Performance Appraisal Challenge

(a) Legal Constraints- PA must be free of discrimination. Whatever form of evaluation is used it should be reliable & valid; otherwise placement decisions which are based on PA can be challenged in the legal courtsGM example : From book

(b) Rater Biases-Bias is the inaccurate of a measurement. Human emotions of evaluators usually cause biasness in performance evaluation

(b) Rater Biases

The halo effect/ error

The error of central tendency

Leniency & strictness bias

Cross- cultural biases

Personal prejudice (discrimination)

The recency error

Rater Biases

Bias is the inaccurate of a measurement.

Human emotions of evaluators usually cause biasness in performance

evaluation

Recency error

StereotypingPersonal prejudice

Cross-culture biases

Leniency &Strictness bias

Error ofCentral tendency

Halo effecterror

Distortions

Factors that can Distort Appraisals

• Leniency & Strictness bias– Leniency-Raters tend to be easy in evaluating the

performance of the employees– Strictness bias-opposite, it results when raters

being too harsh in their evaluations• Halo error

– When the raters personal opinion of the employee influences the measurement of performance.

– Distort performance evaluation if a supervisor likes or dislikes a person & rates him good or bad accordingly

– When rater evaluates personality traits (instead of behaviors)

Factors that can Distort Appraisals– Central tendency:

– Raters do not like to rate employees as effective or ineffective, they distort the ratings to make each employee appear average

– The reluctance to use the extremes of a rating scale

Cross- cultural biases– Rater holds expectations about human behavior that are

based on his culture– When people are expected to evaluate others from different

cultures, they may apply their cultural expectations to someone who has a diff set of beliefs or behaviors (“respect & esteem” may bias the rating)

– Due to cultural value of respect a young Asian employee would rate an elderly employee out of respect good

Factors that can Distort Appraisals

– Stereotyping/Personal prejudice (discrimination)– raters dislike for a group or class of people may

distort the ratings those people receive– HR dept noticed that male supervisor give

undeserved low ratings to women who hold “traditionally male jobs”– this form of discrimination can lead to violation of EEO

– The recency error– Recent actions are remembered by the rater…

good or bad before evaluation.

How to Reduce Rater Bias

When rater uses subjective performance measures, biases can be reduced through training, feedback & proper

selection of PA techniques……• Three approaches:

Absolute standards

Relative standards

Future-Oriented Appraisals

Past- oriented Appraisal Methods

Evaluating absolute standards: • An employee’s performance is

measured against established standards.

• Evaluation is independent of any other employee.

Appraisal Methods

Relative standards: • Employees are evaluated by comparing

their performance to the performance of other employees.

Past- Oriented Appraisal Methods

Past-oriented approaches measures performance that has already occurred. The disadvantage of this approach is that past performance cannot be changed but employees do get feedback, which helps them

in their future performance.

• Rating scales Ranking Methods• Checklists Forced distribution• Forced choice method Point allocation method• Critical incident method Paired comparisons • Accomplishment Records• Behaviorally anchored rating scales• Field review method• Performance tests and observations

Absolute standards Relative standards

Appraisal MethodsRelative standards:

– Rating Scale Appraisal: Appraiser rates employee on a number of job-related factors

– Subjective evaluation of an individuals performance along a scale from low to high

– Totally based on the opinions of rater– Criteria often is not directly related to job performance – Adv : simple, inexpensive– Dis-adv: specific criteria maybe omitted to make the

form applicable to a variety of jobs– Example: equipment maintenance-imp part of job, but

omitted b’coz it does not apply to all “Thus making evaluation ineffective”

Checklist Appraisal

– Appraiser checks off behaviors that apply to the employee– Rater selects words or statement that describes the

employees performance & characteristics– With or without the rater knowledge the HR dept assign

weights to different items in the checklist depending on their importance- weighted checklist

– List contains enough items, it may provide an accurate picture

– Adv: limited training required– Dis adv: use of personality criteria instead performance

criteria- improper weights by HR dept– Does not allow rater to give relative ratings

Appraisal Methods– Forced-Choice Appraisal: Appraisers choose from

sets of statements which appear to be equally favorable, the statement which best describes the employee.

– HR specialists code items on the form into predetermined categories such as learning ability, performance & interpersonal relations

1. Learns quickly…… works hard2. Absent too often…. Usually tardy 3. Work is reliable……performance is a good example

for othersDisadvantage: less job related statements employee may get offended--- one area overlooked

Appraisal Methods

Critical Incident Appraisal• Rater record statements that describe extremely

good or bad behavior related to job performance• Recorded incidents briefly explain of what

happened• Incidents include both + (Positive)& - (Negative)

– Advantage: provide job related feedback» Reduces recency bias

– Disadvantage: rater looses interest in recording incidents after some time

Appraisal Methods

• Accomplishment records: – Closely related to critical incident method– Primarily used by professionals– Employee-produced records of

publications, speeches, leadership roles & other professional related activities

– Disadvantage: list only includes good things the person did

Behaviorally anchored rating scales

• BARS are families of evaluation approaches that identify & evaluate job related behaviors

• Specific name behaviors are used to give the rater reference points in making the evaluation

BES BOS

Behavioral expectation scales• Specific behaviors are ranked along a scale For example BES for Bartender’s Customers Relations:

• Extremely Out Standing 7 you can expect this bartender• Performance to help customers in need.

• Good performance 6 you can expect this bartender to calm down arguments before they erupt into fires

• Poor performance 2 you can expect this bartender to check identification of customers on their first time in the bars.

• Extremely poor 1 you can expect this bartender Performance to pick up customers drinks

finished or not with little or no warning at close time.

Field review method • Skill representative of HR dept goes into field &

assists supervisor with their ratings• HR specialists obtain information from immediate

supervisor about employee performance• Expert prepares an evaluation• Evaluation sent to supervisor for review, changes,

approval and discussion with employee who was rated

• Reliability and comparability are more likely and rater biases are less common

• Bias may still exist since primary source of info is the supervisor

Performance test & observations

Assignment

Comparative Evaluation Approaches

Relative standards:– Individual Ranking: Employees are

ranked from highest to lowest– best to worst

– HR dept knows that certain employees are better than others but it doesn’t know by how much

– Paired Comparison: • Each individual is compared to every other.• Final ranking is based on number of times the

individual is preferred member in a pair.

Employees Tufail Waheed Asif Akmal Arif Sohrab Naeem Latif Farooq

1.Haris 1 1 4 1 1 1 1 9 1

2.Tufail 3 4 2 2 2 2 9 2

3.Waheed 4 3 3 3 3 9 3

4.Asif 4 4 4 4 9 4

5.Akmal 6 5 8 9 10

6.Arif 6 8 9 10

7.Sohrab 8 9 10

8.Naeem 9 10

9.Latif 9

10.Farooq

Forced distributions

• Raters sort employees into different classifications, usually with specified proportions in each category

• Relative differences among employees are not known

• Overcome biases of Central tendency, leniency, and strictness errors

• Example from the book or handouts

Point allocation

• Rater allocate a fixed number of points among employees in the group

• Good performers are given more points than poor performers

• Rater can recognize the relative differences between employees

• Halo effect & recency bias remain

Point allocation method Points Employees • 17 A• 14 B• 13 C• 11 D• 10 E• 10 F• 9 G• 6 H• 5 I• 5 J• 100

Allocate all 100 points to all employees according to their

relative worth. The employee with the

maximum points is the best employee

Future oriented appraisals

Future – orientated focus on future performance by evaluation an employee’s potential & setting future

goals.

• Self-appraisals • Management by Objectives (MBO’s)• Psychological appraisals • Assessment centers

Self appraisals • Useful tool for employees who want to develop

themselves• Means evaluating oneself• Important dimension of self appraisals is the

employee involvement in & commitment to the improvement process

• Example: construction CO. supervisor telling employees what is expected- employees fill a sheet-understanding of the job before 10-15 days PA is to be done– job accomplishment, performance difficulties &

suggestions for improvement– tells supervisor what they need to do in future to eliminate roadblocks

Future oriented appraisals

Management by Objectives (MBO)– includes mutual objective setting and

evaluation based on the attainment of the specific objectives

– It consists of goals that are objectively measured and mutually agreed on by employee and the manager.

Goal setting Action planning

Self-controlPeriodic review

Appraisal Methods

Using Achieved Outcomes to Evaluate Employees – Common elements in an MBO program

are:• goal specificity• participative decision making• an explicit time period• performance feedback

– Effectively increases employee performance and organizational productivity.

Psychological appraisals• Org employs psychologists- to assess individuals future

potential, not that individuals past performance• In depth interviews, psychological tests, discussions with

supervisors and review of other evaluations• Raters writes an evaluation of employees intellectual,

emotional, motivational and other work related characteristics that may predict future performance

• relate to job opening for which the person is being considered- placement-development decisions can be made to shape persons career

• Slow and costly– good for young bright managers• Quality of appraisals depends on skills of psychologist-

some employees object to these evaluation

Creating More Effective Performance Management Systems

Combine Absolute and Relative Standards:

• Absolute standards tend to be positively lenient; relative standards suffer when there is little variability.

• Combining the standards tends to offset the weaknesses of each.

Provide Ongoing Feedback:• Expectations and disappointments

should be shared with employees on a frequent basis.

Use Multiple Raters:• Increasing the number of raters leads to more

reliable and valid ratings. – Use peer evaluations: Coworkers offer

constructive insights and more specific evaluations.

– Upward appraisals allow employees to give their managers feedback.

– 360-Degree appraisals: Supervisors, peers, employees, team members, customers and others with relevant information evaluate the employee.

Rate Selectively– Appraisers only evaluate in those areas

about which they have sufficient knowledge.

– Appraisers should be organizationally as close as possible to the individual being evaluated.

– More effective raters are asked to do the appraisals.

Train Appraisers:• Untrained appraisers who do poor

appraisals can demoralize employees and increase legal liabilities.

Guidelines for Evaluation Performance Interviews

Emphasize positive aspects of employee performance

Tell each employee that the evaluation session is to improve performance, not to discipline

Conduct the performance review session in private with the minimum interruptions

Review performance formally at least annually & more frequently for new employees or those who are performing poorly

Guidelines for Evaluation Performance Interviews

Make criticisms specific, not general & vagueFocus criticisms on performance, not personality

characteristicsStay calm & do not argue with the person being evaluated Identify specific actions the employee can take to

improve performance Emphasize the evaluator’s willingness to assist the

employee’s efforts & to improve performanceEnd the evaluation sessions by stressing the positive

aspects of the employee’s performance

Performance appraisal

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